"In his State of the Union address and a follow-up speech outlining a major new higher education initiative, President Barack Obama took aim at an issue that resonates with a constituency likely to be important to his re-election campaign: college students struggling to pay off their student loans.
A marquee piece would be a new, $1 billion version of his signature Race to the Top competition aimed at encouraging states to improve their higher education systems—while requiring that they maintain adequate levels of funding for higher education if they hope to win one of the grants.
The adminstration also is seeking to create a $55 million grant contest, dubbed the "First in the World" competition, to help institutions scale up promising strategies in areas such as technology and early-college preparation.
And Mr. Obama last week put universities on notice that they may be in danger of losing key federal student financial aid if they don't keep tuition in check and are unable to graduate higher numbers of students, including those eligible for Pell Grants, which help low-income students pay for college.
Specifically, the administration wants to reconfigure the formula for distributing campus-based aid, such as that in the Perkins Loan Program, to favor institutions that hold tuition down while graduating higher numbers of low-income students.
Both proposals would require congressional approval.
....Mr. Obama also proposed a $55 million competition that would offer grants to colleges and universities to scale up promising practices in areas including technology and college preparation. At first blush, that program appears modeled on the Investing in Innovation grant program, which offered similar rewards to schools and nonprofits.
Another new proposal would revise the Perkins Loan Program and other campus-based aid programs. Right now, that aid is distributed under a formula that rewards schools in part for the number of years they have participated in the system. Under the change, colleges that kept tuition under control and graduated a relatively large share of Pell Grant-eligible students would be rewarded with a larger share of the grants.
The administration is also planning to create a "college scorecard" to make it easier for students and parents to choose a college that they can afford and that will help advance the students' career goals. The so-called "shopping sheet" would include postgraduation earnings and employment information for a college's students, according to published reports.
Other higher education proposals unveiled last week includedoubling the number of work-study jobs, which allow students to work part time on campus to defray their college costs; making permanent the American Opportunity Tax Credit, which provides up to $10,000 in tax breaks for tuition over four years of college; and keeping the interest rate on subsidized Stafford Loans from doubling on July 1 of this year as it is set to do under current law.
Mr. Obama also called on businesses to partner with community colleges to help spur job creation.
David Baime, the senior vice president for government relations and research at the American Association of Community Colleges, said he was encouraged that the president emphasized the need for states to do more to support higher education.
"Our colleges have done a great deal to curb their costs," he said. "But the reality is that tuition will continue to increase if states continue to cut their support."